Healthcare Reform Puts a Squeeze on Revenue Cycle

H. Jeffrey Brownawell, chief revenue officer at Memorial Hermann Health System, a Houston-based provider with 3,508 beds, isn't surprised by the governor's stance. "I think there is some good conversation going on, and people understand how much money we are talking about. But I think there is a fundamental political issue as far as the expansion of Medicaid and what it would do to the state," he says.

Brownawell says he is not convinced that the health insurance exchanges—the federal government will operate exchanges in states that choose not to implement them—will increase the number of insured people in Memorial Hermann's service area because the fine for not purchasing insurance may not be expensive enough to motivate people to spend the money for coverage.

Although anyone who does not receive health insurance through an employer or government program is required under the individual mandate provision of the PPACA to purchase it, the penalties for not doing so are widely considered to be too small and toothless to force compliance.

"Hopefully, there will be more people who decide to be insured versus taking the penalty, but the penalty may just not be enough to cause people to jump in and add health insurance because of their out-of-pocket expense," Brownawell says.

Memorial Hermann's leadership team is currently working to establish its strategy with regard to the exchanges but does not anticipate much improvement to its level of bad debt, Brownawell says. "We are having a lot of discussions right now about where and how we want to position ourselves with the health exchanges. … We are not looking at a big reduction in our bad debt and self-pay patients because Texas is not expanding Medicaid."

While Brownawell is not expecting to see a decrease in bad debt once the exchanges roll out, he is also not anticipating an increase. "Houston is a very uninsured city. Our uninsured rate is about 30% to 33%. We are not expecting to see more bad debt," he says.

Like Nguyen at Palomar Health, Brownawell believes one of the biggest challenges with healthcare reform is the uncertainty that surrounds it. "It will be very interesting over the next five years to see how it all plays out with the ACA and that transformation—to see [what happens] with health exchanges and whether states decide to expand Medicaid with the federal government. There are still a lot of things to be determined and issue to be resolved."